Correlation Between DAX Index and Northrop Grumman
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By analyzing existing cross correlation between DAX Index and Northrop Grumman, you can compare the effects of market volatilities on DAX Index and Northrop Grumman and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DAX Index with a short position of Northrop Grumman. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Northrop Grumman.
Diversification Opportunities for DAX Index and Northrop Grumman
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DAX and Northrop is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Northrop Grumman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northrop Grumman and DAX Index is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DAX Index are associated (or correlated) with Northrop Grumman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northrop Grumman has no effect on the direction of DAX Index i.e., DAX Index and Northrop Grumman go up and down completely randomly.
Pair Corralation between DAX Index and Northrop Grumman
Assuming the 90 days trading horizon DAX Index is expected to generate 0.56 times more return on investment than Northrop Grumman. However, DAX Index is 1.78 times less risky than Northrop Grumman. It trades about 0.09 of its potential returns per unit of risk. Northrop Grumman is currently generating about 0.02 per unit of risk. If you would invest 1,662,899 in DAX Index on September 2, 2024 and sell it today you would earn a total of 299,746 from holding DAX Index or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Northrop Grumman
Performance |
| Timeline |
DAX Index and Northrop Grumman Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Northrop Grumman
Pair trading matchups for Northrop Grumman
Pair Trading with DAX Index and Northrop Grumman
The main advantage of trading using opposite DAX Index and Northrop Grumman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Northrop Grumman can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Northrop Grumman will offset losses from the drop in Northrop Grumman's long position.| DAX Index vs. FEMALE HEALTH | DAX Index vs. CDN IMPERIAL BANK | DAX Index vs. Webster Financial | DAX Index vs. Cardinal Health |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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